Due Diligence of Outsourced Pharmacy Compounding

Laura M. Cascella, MA, CPHRM

Data show that the majority of hospitals outsource some or all of their compounded sterile preparations (CSPs), and most rely on more than one vendor to meet their needs.¹ The reasons for outsourcing are numerous. For example, healthcare organizations might outsource compounding services if they:

• Need to acquire medications that are outside the scope of their usual compounding services
• Don’t have the proper staff resources or equipment to compound various preparations
• Need products that are too risky or expensive for in-house compounding
• Are facing supply shortages of necessary medications because of manufacturing problems, discontinuation of certain products, or supply chain issues
• Need individual doses of drugs or products with longer shelf lives²

Outsourcing can offer numerous organizational, operational, staffing, financial, and other benefits for organizations. Yet, it is not without risks, as evidenced by the 2012 fungal meningitis outbreak that was linked to a compounded epidural steroid injection. That incident showed how lax protocols and oversight can lead to widespread and devastating consequences.

Although unprecedented in scale, the 2012 outbreak was not an anomaly. Over the years, many reports of medication errors linked to compounding have emerged, and some of these errors have had serious patient safety outcomes, such as infections, overdoses, and fatalities.³ An investigation by The Pew Charitable Trusts found that compounding errors were linked to more than 1,500 adverse events, including at least 116 deaths, over an 18-year period. Further, the actual number of adverse events due to compounding errors during this timeframe was likely higher due to underreporting of these issues.⁴

Various factors — such as inadequate oversight, poor compounding practices, and lack of adverse event reporting — can increase the risks associated with outsourced CSPs. Yet, despite these concerns, healthcare organizations still recognize the vital role that compounding plays in patient care.

To help mitigate the risks associated with pharmacy compounding, the American Society of Health-System Pharmacists (ASHP) and the Institute for Safe Medication Practices (ISMP) recommend that healthcare organizations perform due diligence when selecting pharmacies to provide compounding services. Risk strategies that healthcare organizations can employ as part of their due diligence efforts include the following:

• Whenever possible, order FDA-approved products from pharmaceutical manufacturers. Consider pharmacy compounding only if a medication, dosage, form, or strength is not commercially available.
• When outsourcing compounding services, carefully evaluate potential contractors and assess their qualifications. Due diligence of compounding services requires evaluating a range of criteria, including pharmacy history, licensing, safety precautions, quality assurance processes, staff education, and more. MedPro’s checklist Assessing Pharmacy Compounding Services offers high-level guidance on evaluating these factors.
• Consider visiting potential contractors’ corporate and pharmacy facilities as part of the assessment process. Determine whether contractors allow unannounced inspections after a contract is in place.
• Review your organization’s drug supply chain and pinpoint any areas in which externally compounded medications might enter the healthcare system. Reviewing the drug supply chain is particularly important in situations in which hospitals and healthcare systems acquire physician practices, surgery centers, and other healthcare facilities.
• Establish and maintain adequate auditing and documentation processes for outsourced CSPs (e.g., in relation to types and quantities of products received, turnaround times, delivery methods, security protocols, quality reports, etc.).
• Ensure that your organization has a functional and accurate method for identifying patients who have received CSPs.
• Determine whether state law requires patient consent for use of outsourced CSPs.
• Review existing contracts with compounding pharmacies to ensure they comply with your organization’s current policies and procedures for outsourcing. Also, routinely evaluate outsourcing policies and procedures to identify any gaps or areas for improvement.
• Include representatives from the pharmacy department in all decisions related to acquiring and using products from external compounding pharmacies.⁵

For more detailed information about compounding, see the ASHP Guidelines on Outsourcing Sterile Compounding Services. Additional information about pharmacy compounding can be found in ASHP’s Compounding Competency Assessment Center.

For information related to drug shortages, see MedPro’s Risk Tips: Managing Drug Shortages and Risk Resources: Drug Shortages.

Endnotes

¹ State of pharmacy compounding 2024. (2024, April). Pharmacy Purchasing & Products, 21(4 [Supplement]). Retrieved from www.pppmag.com/article/pppv21n4s1

² Johnson, C. Y. (2012, Nov. 3). Compounding pharmacies fill important medical niche. The Boston Globe. Retrieved from www.bostonglobe.com/metro/2012/11/02/compounding-pharmacies-filled-niche-for-major-hospitals/47MsPtBMEkT67TQmfNXF8O/story.html; American Society of Health-System Pharmacists. (2015, October). ASHP guidelines on outsourcing sterile compounding services. American Journal of Health-System Pharmacy, 72(19):1664–1675. Retrieved from www.ajhp.org/content/72/19/1664; Watson, C. J., Whitledge, J. D., Siani, A. M., & Burns, M. M. (2021). Pharmaceutical compounding: a history, regulatory overview, and systematic review of compounding errors. Journal of Medical Toxicology, 17(2), 197–217. doi: https://doi.org/10.1007/s13181-020-00814-3

³ The Pew Charitable Trusts. (2020, March 2). U.S. illnesses and deaths associated with compounded or repackaged medications, 2001-19. Retrieved from www.pewtrusts.org/en/research-and-analysis/data-visualizations/2020/us-illnesses-and-deaths-associated-with-compounded-or-repackaged-medications-2001-19; Institute for Safe Medication Practices. (2017, June). Death due to pharmacy compounding error reinforces need for safety focus. Retrieved from www.ismp.org/resources/death-due-pharmacy-compounding-error-reinforces-need-safety-focus

⁴ The Pew Charitable Trusts, U.S. illnesses and deaths associated with compounded or repackaged medications, 2001-19.

⁵ American Society of Health-System Pharmacists, ASHP guidelines on outsourcing sterile compounding services; American Society of Health-System Pharmacists Research and Education Foundation. (2021). Outsourcing sterile products preparation: Vendor assessment tool. Retrieved from https://outsourcing.ashp.org/; Institute for Safe Medication Practices, Death due to pharmacy compounding error reinforces need for safety focus; Rosebush, L., Holmes, L., & Wagner, M. (2022). Due diligence in drug compounding M&A deals. LexisNexis Practical Guidance. Retrieved from https://admin.bakerlaw.com/wp-content/uploads/2023/07/Due-Diligence-in-Drug-Compounding-MA-Deals.pdf

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